tv Nightly Business Report PBS May 26, 2011 7:00pm-7:30pm EDT
>> tom: google launches an electronic wallet that lets you use your cellphone to pay for everything from lattes to clothes, and it lets merchants entice customers with deals of the day. >> in the future you find an offer you want, you save it to your wallet with a click-- no more clipping or printing. spending and saving with your cell phone, but at what price. you're watching "nightly business report" for thursday, may 26. >> suzanne: but will paying with you're watching "nightly business report" for thursday, may 26. this is "nightly business report" with susie gharib and tom hudson.
this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> tom: good evening everyone and thanks for tuning in. susie gharib is off tonight. i'm joined by suzanne pratt. google finally took the wraps off google wallet. >> tom, the google effort put software on smart phones, it allows subscribers to use the device to pay for things. mobile payment services are widely used in japan and already there are other u.s. companies testing similar applications. >> tom: erika miller explains
there are some obstacles to the success of the google wallet. >> reporter: it's a familiar routine. you go into a store, pick out the items you need and pay with cash or credit card. but if google and mastercard have their way, the experience will soon be much different. shoppers will get personalized coupons on their cell phones, pay with the phone and have receipts immediately emailed. mastercard's ed mclaughlin promises nothing short of life- changing technology. >> we think the experience is absolutely revolutionary. it's going to transform shopping. so, it's not simply the payment- - which you can use paypass and the trusted mastercard network for-- all that like you would have before. but now you can also get coupons, rewards, you can redeem the offers, you can have your receipts right in your phone. >> reporter: mobile payment may be enticing to many consumers, but not everyone. a big concern is security. plenty of peoplere uncomfortable putting financial information on their cell phones. >> reporter: similar to an a.t.m. card, the google wallet will be protected by a pin number. the technology's roll-out will take time. the service is being be tested
in new york and san francisco, and will be expanded nationwide this summer. currently only 120,000 merchants have the paypass technology needed to participate. google's stephanie tilenius says the appeal for stores is luring in customers with deals. >> offers will be delivered to your inbox as an offer of the day. you can also access offers via your mobile apps like google shopper and google wallet. >> reporter: it may surprise you that google and mastercard are late to the game. there are a host of other tech companies, phone carriers, banks and credit card issuers testing similar systems. one disadvantage for google and mastercard is their mobile payment system is currently only available to sprint customers. "p.c. magazine's" lance ulanoff says it's possible verizon and at&t might not participate. >> maybe they will go with someone else, for example, what if apple comes out next week and says "here's the new iphone 4s. it has n.f.c., it has smartcard technology, oh, and our partners
are at&t and verizon." this could happen. and if this does happen, you have two competing technologies. >> reporter: and it's not just apple that could announce a competing mobile payment system. experts predict amazon and facebook will soon follow. erika miller, "nightly business report," new york. >> suzanne: here are the stories in tonight's n.b.r. newswheel: stocks move higher despite some weak economic news. the dow rose eight points, the nasdaq was up 21 and the s&p 500 added five. big board trading volume slipped to 861 million shares, while nasdaq volume continues to hold just below two billion shares. the nation's growth rate hit a speed bump in the first three months of the year as consumer spending slumped. the commerce department says first-quarter g.d.p. came in at 1.8%, that's down from 3.1% at the end of last year. new claims for jobless benefits reversed course this week, rising when a drop was expected.
the labor department says new claims rose by 10,000 to a seasonally adjusted 424,000. a federal judge in wisconsin today struck down a controversial state law that stripped most collective bargaining rights from public workers, but that may not be the final decision as wisconsin's supreme court takes up the issue next month. still ahead, friending your utility company, or how the concept of social networking can help businesses save big money on energy. it's tonight's "planet forward." >> tom: the vice president and a bipartisan group of congressional negotiators met for a little over an hour today. they're working to hammer out an agreement to cut federal spending and raise the nation's debt ceiling. time runs out in early august. lawmakers in the talks say they are making progress, but a key issue will be just how long any extension of the debt ceiling will last. darren gersh takes a look. >> reporter: on the short end, a debt ceiling extension may last
just until the cherry blossoms come out again in washington-- about six months or so. budget watcher stan collender is not looking for the talks now underway to reach a long-term agreement. >> i think they are going to need something at least symbolic, a fig leaf-- something a number of members of congress can hang their hats on that will say, "well, it's not as much as i would have liked, but it's all we're going to get." my guess is they will also do a relatively short-term increase. maybe just enough to get through next march, so they'll have to come back and do this again. >> reporter: the outline of the emerging budget agreement is pretty clear. roughly $1 trillion in discretionary spending cuts over ten years; cuts to entitlement like farm programs, federal retirement benefits and unemployment compensation; and some kind of budget enforcement rule. that could be a cap on spending or some kind of trigger for automatic cuts if debt or spending exceeds a target. that would be enough to reach a deal on the debt ceiling, but likely not enough to push this
issue past the next election, says political economist andy laperriere. >> i think on the high end it is probably only a one-year extension. one year is about a $1 trillion increase in the debt ceiling, and most of the folks i talk to on capitol hill think that most members of congress don't want to vote for a $2 trillion debt ceiling which would take you through the election. >> reporter: so far, participants in the talks say the tone is positive, but keep in mind that the goal many budget experts say we need to hit is more than $4 trillion in cuts. the negotiations now underway will get a quarter of the way there. >> that's a pretty modest down payment on what's needed, but that is where things are headed. >> reporter: another big budget issue will come up this fall. the payroll tax holiday expires next year. the obama administration is likely to push for an extension. but given the huge deficit, that faces long odds. darren gersh, "nightly business report," washington.
>> tom: america and emerging markets are bellying up to the bar more often. alcohol sales in the u.s. and in developing economies have been picking up. names like jameson whiskey, absolut vodka and chivas scotch have fueled the profit growth at french liquor giant pernod ricard to the tune of about 7% this year. we spoke with the company's c.e.o. pierre pringuet, starting with how he sees the u.s. economy.
>> well, it's definitely improving. and we can see that today. the spirit market is growing, back to growth. so what is good for us is tha that... >> tom: what do you think is driving that with unemployment still generally thought of as pretty high in the united states? >> yes indeed. but when we look at some consumer confidence index, it is improving. so i think that's the background situation, and for us it's relatively -- >> tom: you are based in france. western europe is the weakest spot for new terms of growth. is they a reflection of the european economy and some of the debt questions that are happening with governments? >> i would say that france is behaving relatively well. we posted 4% growth, organic growth for the last nine months. probably the worst is more in southern europe, so spain and
greece, which are the most -- >> tom: those two countries are in the crunch of the debt crisis that's going on in southern europe. do you see your company being impact bid that through this year into next year? >> i consider that there is no sign of improvement in those two countries, spain, i would also add portugal. but fortunately what we can see is that the situation is improving in northern europe, for insans the u. k., the spirit market is growing. so germany is also very well, not to forget about eastern europe, which is absolutely booming. >> tom: have you been growing the company through acquisitions, certainly over the last decade, back in 2001 you bought a good chunk of seagrams wine and spirits in 2005 a partnership and then got the absolute vodka brand in 2008. there's been salk r talk of a
big competitor interested in cuervo. are you interested in cuervo? >> well, our position today is not to make any further acquisition for the time being. you mentioned the three acquisitions, i should mention that altogether it represented 20 billion euros of investment. so now the focus is really to continue to develop the company, and we communicated to the market target, which is by june 2012, the main focus. >> tom: so looking now to pay down the debt that you incured by the acquisition strategy, as opposed to going out and looking for growth via purchases? >> it's definitely for the time being the organization. it doesn't mean that we rule out forever acquisition, that could come later on. >> tom: we appreciate the insights, and the global
alcohol and spirits business, our guest this evening, the c.e.o. of pernodry card, pierre pringuet. >> suzanne: a tiny game in the dow today. >> tom: yes, lots of better feelings in the last 48 hours certainly, despite kind of that drum beat of concerns over the economy six months ahead or so, let's go ahead and roll with tonight's market focus. >> tom: stocks were able to make small gains for the second day in a row, but we saw a big rally in bonds. let's start with the past 180 sessions with the 10-year u.s. government bond yield. as this interest rate drops, the price of the bond rallies. this 3.06% is the lowest rate all year, fueled by growing worries about the u.s. economy
and possibly fewer bonds, as the debt ceiling negotiations continue on capital hill. a big place to watch in the market. meantime, leading the dow was tech giant microsoft, jumping 2%. trying to break its downward trend. hedge fund manager david einhorn called for c.e.o. steve ballmer to be replaced. einhorn points to microsoft's stock performance as a reason for ballmer to leave. einhorn owned nine million shares of microsoft as of late march. let's talk about performance under ballmer. ballmer has been c.e.o. for more than a decade. this is the past 10 years of m- s-f-t shares. they're down 30% from the late spring of 2000. today again with a slight rally. the luxury business is treating tiffany well. its first quarter earnings came in a dime per share above estimates. sales were up by double digits and margins were higher.
a wicked combination, and tiffany saw green. up 8.6%. it led the consumer discretionary sector today, which was the strongest stock group. the rally takes tiffany to a new 52-week high, which is also a new all-time high for shareholders. it wasn't the only higher-end retailer to sparkle. signet jewelers, owner of jared and kay jewelers, was up 5%. earnings came in better than expected. this is a new 52-week high for coach, up 5%. and polo ralph lauren recovered some of what it lost yesterday, up 3%. two other retailers-- shoe store genesco raised its outlook-- shares hit a new 52-week high. electronics store h.h. greg tried to snap back after a falling this year. strong earnings helped the stock add almost 18%. drug maker abbott lab shed more than 1.5% as volume picked up. the national institutes of health stopped drug trials for its cholesterol treatment
because it was found to be ineffective. meantime, emergent bio-solutions rallied more than 15% to a three-year high. the company is expected to get a u.s. government contract for its anthrax vaccine. finally, some financial fallout from the midwestern tornadoes for shareholders of empire district electric. the company provides electricity in missouri, kansas, oklahoma and arkansas. shares dove 15% after suspending its quarterly dividend for the rest of the year. and that's tonight's "market focus."
>> suzanne: when it comes to energy use, businesses spend millions of dollars a year to heat and cool their buildings. tonight, we continue our series "planet forward," a partnership with the george washington university social media project using your ideas to power our future. frank sesno introduces us to a new kind of network that is helping companies cut their energy costs. >> reporter: social networking is the cool kid on the block, but can technology like this be used to cut energy costs and make money? erica rowell of duke university thinks it just might. she uploaded to "planet forward" an idea about one duke alum who is hoping to turn a profit by creating a mini-energy network. >> essentially, you can think of it as democratization of the power grid. brewster. >> reporter: meet david brewster.
he comes out of duke's nicolas school of the environment and he dreamed of a big network, one that would... >> ...fundamentally change the way the electric power industry operates. >> reporter: how? by smoothing out the spikes. his company, enernoc, is trying to innovate in high-tech and low-tech ways. the low-tech? he works directly with building managers to identify what energy they can live without when the grid is stressed-- raise the thermostat a few degrees, dim some lights. high-tech? enernoc tracks usage in real time through its network and, when the grid is stressed, can remotely lower the building's consumption. >> instead of relying on power plants to always feed electricity out of the system, we can actually utilize the potential energy efficiency or demand reductions of electricity at buildings. >> reporter: the seaport hotel in boston is part of enernoc's network. >> they came to the property, they analyzed where we could cut energy without impacting our guests and we committed to 300 kilowatts of reduction. >> enernoc can both identify savings and control usage by using this smart-grid device that measures real-time consumption.
>> reporter: the same way we all communicate by email, each building tells enernoc how much power its using. >> most end-use energy users of electricity have no idea when and how much energy they're consuming. >> reporter: here's how it works. utilities pay enernoc for the networking service and for any energy it saves. enernoc then shares the revenue with the building owners. together, they reduce energy consumption and make money. >> the thing about demand response is that you can participate and be conservative with your energy consumption when they ask you to, or we can all suffer a brownout or a blackout when the grid goes down. >> reporter: demand response isn't new, but brewster says that today's technology makes it efficient. >> its sort of the last frontier of information technology, and so our mission is really to bring technology to bear to help business get a better grasp on how they're using energy so that ultimately they can make better energy decisions. >> reporter: enernoc wasn't the only company to bring high-tech communications to energy savings. regen energy uploaded a video to
planet forward, showing off what it calls "swarm logic" connecting smaller devices wirelessly-- communicating like bees-- to raise or lower energy use as needed in one building. so, while networking can change your social life and make you more-- or less-- productive, it's quietly moving the planet forward. >> suzanne: joining us now, frank sesno of "planet forward." >> suzanne: joining us now frank sesno. a very cool story, no pun intended. exactly how does this work? >> so say we'll take a real life example, there's a chain of smaeshlgs in southern california, 150 of them. they go to enernoc, they sign them up. if suddenly there's a hot day and all of the air conditioners in the state go on, the utility or someone in the grid can go to enernoc and say we need x amount of power, they push the button and dispch a charge to all 150 supermarkets, they dim the
lights by about 30, 40%, they turn off some of the anti-sweat devices, they back off the air conditioning a little bit, and you have essentially produced power, and you avoided a brownout. it's kind of like a virtual power plant. >> suzanne: and how much could the supermarket potentially save, do you think? >> well, in this particular case, the way this works, this is the a large chain in southern california, just for signing up they get a quarter million dollars a year without having to lower their power. and if they lower their powers because they have to, then they split the saves with enernoc. and there's a huge amount of this reserve power out there, so it really is a little magic trick. >> suzanne: what is the potential for this technology, do you think? >> technology, there's a lot of potential, because think of it this way. we call it demand response. there's the equivalent of three nuclear power plants worth of demand response power out there. so there's a lot of power, call it the extra stuff you don't really need, you
know, you back off the a. c. a little bit, you back off the lights a little bit, you're still seeing, you're still cool, but not quite where you were before. so there's a lot. >> suzanne: i'm going to think of you the next time i turn on the lights. >>,r time you turn off the lights. >> suzanne: okay, frank sesno of planet forward. >> tom: here's what we're watching for tomorrow: an update on the state of spending when the commerce department releases april's personal income and spending data. mark skousen, editor of "forecasts and strategies," is back as our "market monitor." he has his two favorite stocks in undervalued sectors in the u.s. and europe. and, the higher cost of jet fuel. we'll look at what the upshot is for airlines. >> suzanne: honda predicts its u.s. and canadian plants will be almost back to normal production levels by august. that's sooner the automaker expected, thanks in part to a rebound by its parts suppliers. honda reduced its manufacturing following japan's earthquake and tsunami back in march, but
production of its popular 2012 civic model will continue at a reduced rate due to limited supplies of some parts. last month, the civic was the third-best selling car in the u.s. market. >> tom: a fox in the then thousand, house that's what the justice department is calling the former director of the nasdaq. he faces up to 20 years in prison. johnson admitted to using his post in the exchange's market intelligence un to it gain inside information on nasdaq listed stocks. he made over $600,000 trading stocks on that information.
>> suzanne: the field for tech i.p.o.s might soon get a bit crowded. after linked-in's spectacular debut last week, there are rumblings that zynga, the social gaming juggernaut, is planning to go public. for many, including tonight's commentator, it's reminiscent of the go-go nineties. here's harry lin, executive in residence at idea-lab, a startup incubator in pasadena california. >> within the professional circles that i travel, i am hearing so much about the frothiness of the market that i'm beginning to think that i work at a starbucks as a barista. extra-froth please! no froth! the circles i'm talking about are technology startups, the internet industry, and the
investors and entrepreneurs who drive those businesses. the so-called "frothy market" began in earnest in the second- half of 2010, when group-buying startups such as groupon were garnering eye-bleeding valuations by private investors. and not a week went by without a tech blog-fueled tizzy about facebook and how it's worth, oh, a trillion dollars. what i find fascinating are several of the tangible consequences of the perceived frothiness of the tech and internet markets. startups that just last year who said they weren't going to go public are-- surprise!-- filing for i.p.o.s. early-stage investors, such as angels and incubators, can't get deals done because startup founders are demanding crazy- high valuations. i've got would-be entrepreneurs pitching me their latest, greatest startup ideas-- like a group-couponing designer- clothing-flash-sale social- networking iphone-app mobile check-in electric car. whether you like your technology latte with extra froth or no froth, these startup market dynamics are real.
doesn't matter if valuations are more perception than p-to-e based, because as this froth alchemizes into liquid exits for venture capital investors and startup entrepreneurs, we'll all be wishing we were drinking the same foam. i'm harry lin. >> suzanne: that's "nightly business report" for thursday, may 26. i'm suzanne pratt. good night everyone and good night to you too, tom. >> tom: good night suzanne. i'm tom hudson. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you.